Private equity firms are ramping up their investments in student accommodation pumping hundreds of millions into a sector, with an eye on high rental returns in post-Brexit, post-COVID Britain, according to The Mistoria Group.

Recent research from real estate advisors, Jones Lang Lasalle revealed that one-third of deals for student property in 2021 so far have been financed by private equity, compared to about 15% in total between 2016 and 2019.

With student application numbers projected to rise by 8.5% this year and purpose-built accommodation oversubscribed, property remains attractive for private equity firms.

According to The Mistoria Group, investor enquiries from student accommodation has surged over the last six months, up 23% from UK and international investors.

Mish Liyanage, managing director of The Mistoria Group, said: “Without doubt, the student rental market is the most financially lucrative for investors if it is managed well.

“However, if landlords fail to keep their finger on the pulse of an ever-evolving marketplace, they can easily fall into the trap of not planning properly, or using an inexperienced agent, which may leave them with costly void periods.

“Since 2011, student accommodation has outperformed all other traditional property assets and has been the strongest growing investment property market in the UK. It has also continued to be one of the most resilient investment sectors, with rental incomes and property values remaining stable, or increasing. The attraction of the student accommodation sector has been driven by structural undersupply and positive rental growth year on year.

“Without doubt, the student rental market is the most financially lucrative for investors and landlords if it is managed well. An investor can currently can buy a four bed HMO in a good location for students and professionals, fully refurbished and furnished and tenanted for the coming year, for less than £165,000 in the North West.

“Investing in student HMO accommodation offers a long-term investment option, as the property is highly likely to be in constant demand throughout the calendar year. Typical rents are significantly higher for student properties, than a comparable buy-to-let property in the same city.”